Amalgamated Bank in New York says it is eyeing expansion into neighborhoods where other banks are not.
Calling Manhattan "way overbanked," Derrick D. Cephas, the $4.2 billion-asset bank's president and chief executive officer, said last week that it would focus its expansion over the next three years on underbanked areas in the city's four other boroughs that are dense with low and moderate income workers and immigrants.
At least one of those branches will get a boost from a state program that rewards banks with government deposits for going into low-income areas.
At a ceremony last week in Queens, Mr. Cephas showed off the Long Island City site where Amalgamated will open a branch in February. There are no other bank branches within a mile, and only two within two miles, according to the bank.
"It was a fairly easy decision to do this," Mr. Cephas said in an interview before the ceremony. "There are more than 32,000 residents in this neighborhood, plenty of small businesses, and not a bank in sight."
Aside from its nine New York branches, the bank has a branch in New Jersey, one in California, and one in the District of Columbia, and Mr. Cephas said it is looking to open branches in cities with a high concentration of union workers.
Founded in 1923 by the Amalgamated Clothing Workers of America, Amalgamated Bank is now owned by Unite Here CLC, a labor union for clothing, textile, hotel, and restaurant workers.
Next year the bank likely will add branches in Las Vegas and Los Angeles, he said; it chose Las Vegas after a union for culinary workers pointed out that it has 60,000 to 70,000 members there.
"Unless we have a core constituency who said they'll bank with us, there's no reason for us to pop down a branch and say, 'Here we are,' " Mr. Cephas said.
Mr. Cephas, New York's superintendent of banking during the early 1990s under then-Gov. Mario Cuomo, took over Amalgamated's top job in January after working as its outside counsel for 10 years. He said the bank's union history and its mission to help the working class achieve a better life inspired the expansion plans. "This takes us back to our roots," he said.
Still, many of the residents near its Long Island City location are considered working poor, and a key to making the branch profitable, according to Mr. Cephas, is a state program to entice banks into neighborhoods where making money could be difficult. Under the program, the city and state will deposit $10 million each at below-market rates with Amalgamated, which also will receive a property tax break for 10 years.
To qualify for the incentives, the bank had to demonstrate that the area is underserved and persuade the state to designate it as a "banking development district."
Keith Pilkington, Amalgamated's chief marketing officer, said the program will help make the Long Island City branch more viable.
"It gives us a running start," he said.
As Amalgamated expands, it will look at other underserved areas to open branches and possibly apply for another district designation elsewhere, Mr. Pilkington said.
The bank intends to grow to 25 or 30 branches within a few years and go after retail customers more aggressively than it has before, he said.
"Historically the bank has not actively marketed itself and has not really had a branching strategy," Mr. Pilkington said.
Mr. Cephas said the next new branch is likely to open in Brooklyn; Amalgamated is already looking at potential sites there. Then it will seek other underserved areas in Queens, Staten Island, and the Bronx.
"You'd be surprised how many areas have significant [population] density, but not a bank around," he said.
At the ceremony, Diana L. Taylor, the state's superintendent of banking, joined city officials in welcoming Amalgamated to Long Island City.
William C. Thompson Jr., the city's comptroller, said Amalgamated would give low-income residents at two nearby housing projects - Queensbridge and Ravenswood - an alternative to check cashers.
There are now 29 banking development districts in New York State, including 18 in the city.
